N.K. Investments One Pty Ltd, Vic Roads - Metropolitan North West Region

[2005] VCAT 1362

NK Investments One Pty Ltd's application for costs is refused. Each party shall pay their own cost.

Mr P Chiappi of Counsel instructed by Rigby Cooke, Solicitors.

Mr David Pumpa of Counsel instructed by Ebsworth and Ebsworth, Lawyers.

1 This is an application for costs by NK Investments One Pty Ltd (NK) against Seacrest Pty and Bratsk Pty Ltd (S & B) in these proceedings.

2 On 20 April 2005 we refused S & B's application for review of Banyule City Council's decision to grant a permit to NK for the use and development of the land for the purpose of a multi level building incorporating retail (including supermarket) basement car parking and residential apartments, use of the land for dwellings (residential apartments), a reduction in the standard parking requirements, vegetation removal, removal of easements and provision of business identification signs.

3 Costs were reserved with liberty to apply.

4 NK has applied to the Tribunal for its costs.

5 A half day hearing was conducted before us on 24 June 2005. Submissions were made by counsel for the parties. No evidence was called. At the hearing we made the order set out above that the application for costs was refused and that each party bear their own costs. We now set out the reasons set out for that decision.

6 The application for costs is made under section 150(4) Planning and Environment Act 1987 (PE Act) and section 109 Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act).

7 Section 150(4) reads:

(4) If any proceedings are brought before the Tribunal under this Act and the Tribunal is satisfied that -

(a) the proceedings have been brought vexatiously or frivolously or primarily to secure or maintain a direct or indirect commercial advantage for the person who brought the proceedings; and

(b) any other person has suffered loss or damage as a result of the proceedings -

the Tribunal may order the person who brought the proceedings to pay to that other person an amount assessed by the Tribunal as compensation for the loss or damage and an amount for costs.

8 Section 109 reads:

(1) Subject to this Division, each party is to bear their own costs in the proceeding.

(2) At any time, the Tribunal may order that a party pay all or a special part of the costs of another party in a proceeding.

(3) The Tribunal may make an order under subsection (2) only if satisfied that it is fair to do so, having regard to -

(a) Whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding by conduct such as -

(i) failing to comply with an order or direction of the Tribunal without reasonable excuse;

(ii) failing to comply with this Act, the regulations, the rules or an enabling enactment;

(iii) asking for an adjournment as a result of (i) or (ii);

(v) attempting to deceive another party or the Tribunal;

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding;

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law;

(e) any other matter the Tribunal considers relevant.

9 Mr Pumpa referred to the application for review bought by S & B alone, with no other objector participating initially, and VCAT's decision against it to issue the permit and to the question of law raised by the S & B whether the s 173 agreement affecting the land is a registered restrictive covenant under section 61(4) PE Act. This issue had been considered in application for review P2443/2002 for the same land and a very similar development (Plenty Pty Ltd v Banyule CC[1], where we comprised the tribunal. In this application we upheld our previous decision by answering the same question in the negative.

10 He also referred to the planning issues raised for S & B:

•

Is the grant of a permit for a supermarket premature given the lack of a structure plan for the activity centre?

•

Are the functional and design features of the proposal adequate?

•

Is sufficient car parking provided and does the layout of the design and the car park meet acceptable standards for a functional and safe car park for the proposed use?

and noted that we found for NK on each question.

11 He argued that under s 109(2) VCAT may make an order for costs if it is satisfied that it is fair to do so having regard to the ground specified in 109(3). He relied on the grounds in:

•

Section 109(3)(c) - the relative strengths of the claims made by the parties,

•

Section 109(3)(d) - the nature and complexity of the proceedings,

•

Section 109(3) (e) - the conduct of the parties.

12 He submitted that VCAT has a broad discretion and whilst he agreed there had been no "blatant" conduct in this matter, NK should not be required to absorb the costs of this proceeding given S & B's failed application for review, and sought costs on an indemnity basis.

13 He relied on section 150(4) PE Act on the grounds that:

•

S & B own the current Coles Supermarket in the Ivanhoe Shopping Centre proximate to the land.

•

The same question of law was raised by S & B in the earlier proceedings and was again rejected by the Tribunal on the same basis.

•

The Tribunal completely rejected the planning permits of S & B's case going so far as to criticise the evidence given by S & B's traffic expert.

14 He submitted that despite S & B as owner of the Ivanhoe Plaza Shopping Centre having a material interest in proper and orderly planning of the Centre and the maintenance of the retail hierarchy of the Centre, we should take into account the submission made on this issue by Mr Canavan QC at the merits hearing and be satisfied that S & B primarily brought the proceedings to secure or maintain a direct or indirect commercial advantage rather than for planning objectives.

15 He submitted that the compensation and costs suffered by NK included legal costs and that we should find that accordingly NK has suffered loss or damage under s 105(4) and make an order for costs on an indemnity basis accordingly.

16 Mr Chiappi's submissions in essence admitted S & B's grounds for review related to the reintroduction of the supermarket and its consequences. He noted S & B withdrew from the earlier proceedings when the supermarket was deleted from the proposal.

17 The same question of law had been raised and decided but not taken further to the Court and he submitted this was a real and important issue, gauged in part by the steps taken by the NK's counsel and solicitors to avoid the question's impact on its proposal, including seeking leave to amend the application for review to amend the section 173 agreement (assuming it was found to be a registered restrictive covenant).

18 He submitted the planning issues of the prematurity of the application, the function and design aspects and parking were principal issues which were decided on the merits by us after considering expert evidence and that the decision did impose conditions requiring changes.

19 He submitted the grounds on which S & B relied were legitimate and bona fide, were not so obviously untenable or manifestly groundless to be utterly hopeless and were supported by experienced expert evidence. He submitted there was no evidence that S & B brought the application for the purpose of securing or maintaining a commercial advantage and he disagreed with the suggestion that this could be inferred from the circumstances of the case. He argued there was no evidence NK suffered loss or damage as a result of the proceeding apart from its legal costs.

20 We agree with Chiappi's submissions and consider no order for costs should be made.

21 In considering s 109(2) and (3) we conclude:

•

S & B have not conducted the proceedings in a way which has unnecessarily disadvantaged another party to the proceeding under s 109(3) (a).

•

Likewise there is no material before us to establish that S & B has been responsible for prolonging unreasonably the time taken to complete the proceeding under s 109(3)(b).

22 We agree with Mr Chiappi that while some aspects of his client's case were weak it cannot be said that it had no tenable basis in fact or law to satisfy the test in s 109(3)(c). In particular we consider that the question of law about the s 173 agreement is complex and difficult and is a tenable argument although it was decided against S & B. That the issue may well be disposed by NK and the council bringing the s 173 agreement to an end or by determination of the application to amend the s 173 agreement (which is still on foot) does not affect this conclusion.

23 The structure plan issue is a relatively new proposition arising out of the new policies in Melbourne 2030, involving consideration of VCAT's remarks in Mitcham Towers[2] and consideration of what was said by the Panel in the Wheelers Hill matter. It was a new point and whilst we found that the wealth of planning history and policy for the site and the Ivanhoe Shopping Centre did not warrant refusing the permit in the absence of a structure plan, we are unable to find that the argument was so weak as to have no tenable basis.

24 Many of the other planning issues had been decided in the previous proceeding, but this only took place after S & B had withdrawn and we consider it was entitled to put its submissions afresh insofar as they covered old ground. The re-introduction of the supermarket into the proposal did give rise to new issues and a consideration of the expert evidence did necessitate changes.

25 We find that NK has not shown that the application for review was brought vexatiously or frivolously or that it had no tenable basis in fact or law.

26 We do not agree that without further evidence we must conclude that the application for review was brought for a direct or indirect commercial advantage to satisfy s 150(4). It is obvious S & B's tenant is a major competitor of Safeways and that the introduction of a Safeway supermarket into the centre would create competition for Coles. However whether S & B bought the application for review to secure or maintain a direct or indirect commercial advantage cannot simply be inferred from this. It does have a legitimate interest in the proper and orderly planning of the area and in the maintenance of the planning scheme's retail hierarchy.

27 We consider evidence is needed to prove the proposition that the application was brought for the relevant purpose. We remain uninformed on many relevant issues such as the lease arrangements between S & B and Coles, how long the lease has to run, any options to renew or whether the rent is based on turnover.

28 Likewise in relation to s 150(4) there was no evidence of any loss or damage suffered by NK as a result of the proceedings but merely submissions that they had suffered legal and planning costs as a result of the application. However we consider that the loss and damage referred to in s 150(4) is loss or damage of a different character than the costs of conducting the proceeding, which occurs in every application for review in the Planning and Environment List. The subsection itself distinguishes between an order for costs on the one hand and compensation for loss and damage on the other.

29 We also consider that such loss and damage cannot simply be inferred from the fact that NK had to contest the application for review. Evidence is required. We agree with Mr Chiappi that there are a number of scenarios which could be envisaged where delay did not cause loss or damage, such as uncertainty as to when the project can proceed, financing issues and whether the preferred builder is available, and in the absence of evidence it is not proper for us to draw an adverse conclusion.

30 S 150(4) (a) also raises the issue whether the proceedings were brought vexatiously or frivolously. We have found above this not the case.

[1] [2003] VCAT 750 (26 June 2003)

[2] Golden Ridge v Whitehorse CC (Mitcham Towers) [2004] VCAT 1706 (7 September 2004)